Last week we introduced the subject of what transpired at the Doha Ministerial Meeting last month with a discussion of the patent system, particularly as it applied to pharmaceutical companies and the production of generic drugs. As readers might have realised, this matter is part of the broader issue of Trade-Related Intellectual Property Rights (TRIPS) covered by the WTO Agreement.
Intellectual property
TRIPS is one of the remarkable innovations of the WTO. Like services, it falls outside the traditional goods sector previously covered by international trade regulations under the GATT. Simply put, intellectual property is anything new created by the human mind, which the owner seeks to market. In the WTO, intellectual property includes six areas, other than patents, which we have already mentioned. However, as we shall see, patents are easily the most difficult of the seven areas to implement and to regulate.
The areas other than patents that the WTO Agreement covers are 1) Copyright and related rights. This is typically granted to authors for their literary and artistic work. 2) Trademarks. For example, well-known brand names like Banks beer or Pepsi-Cola. 3) Geographical indications. For example, Demerara sugar or blue mountain coffee, which describes the area of origin. 4) Industrial design. That is, the features related to the look or appearance of a product. 5) Layout design of integrated circuits (such design must be original). 6) Undisclosed information or trade secrets. For example the secret formula for making Coca Cola, and Angostura bitters.
Three tests for patents
Patents involve a scientific or technological innovation or invention that can be commercially or otherwise produced. Such innovation refers to both new products and new processes, or put another way, new ways of making a product. To qualify as a patent, such product or process must meet three tests. First, the product or process must be new. Second, it must involve an innovative step and is therefore "not obvious." Third, it must be useful or capable of application in production. Given these three tests, it is clear that patents are not automatically granted. Although we have so far focused on pharmaceuticals, patents rights cover all fields of technology. Of particular note, in recent years patents have been extended to plant varieties, micro-organisms, and non-biological and microbiological processes of production of animals and plants.
Legal status of patents
What does a patent legally represent? A patent confers on the holder the exclusive right to prevent any other person or organisation from making, using, selling, offering for sale, or importing the product or the process, without the patent-holder's explicit consent. The minimum term for a patent is 20 years from the time of filing. In order to qualify for a patent, the holder must disclose all information related to the product or process completely and clearly. This requirement is to ensure that experts can duplicate the invention in order to establish its claims to originality.
The legal rights conferred on a patent holder can be denied on certain grounds. These include: public order, morality, protection of the environment, and the protection of human, animal and plant life and health. It is out of the last item that health challenges to the pharmaceutical companies which we considered last week have been made.
The aim of TRIPS
To understand what transpired at the Doha Ministerial Meeting in regards to TRIPS we need to be aware of its aims and objectives. The overall or general aim of the TRIPS is to protect intellectual property rights. To achieve this, minimum standards of protection of intellectual property are laid down, which all member countries are required to put in place. Usually this requires the passage of domestic legislation. A member may of course opt to put in place higher levels of protection than that required by the WTO.
One of the objectives behind this aim is to promote technological innovation. This it is believed will be done by seeking to ensure adequate returns to the innovator. Another aim is to encourage the new product and process to be embodied in goods and services. So that, when these are traded, producers and users of the product or process will obtain mutual benefit.
Appraisal
From the description above, the critical issue facing the TRIPS is how to balance the interests between the holders of the intellectual property rights and the users. We include among the latter, potential user, for whom the product or process is necessary, but they cannot afford the price at which it is presently offered.
Conferment of what is in effect a "monopoly" to the patent holder, raises the legitimate risk of the patent-holder abusing this monopoly power, through charging high prices. At the same time, however, a great deal of innovation is driven by the search for profits, and may not be repeated if innovators did not obtain profit. This does not suggest that all innovation is profit-driven. The evidence however, indicates that the vast proportion of innovations is profit-driven.
At the level of global trade, the developing countries are users of intellectual property not owners. The dilemma highlighted here is reflected at the global level, in a situation where the interests of the rich developed countries, as the predominant source of ownership of intellectual property, diverge from those of the poor developing countries, which are overwhelmingly users, not owners. The rich countries have a vested interest in higher levels of protection of intellectual property. The vested interest of poor countries is in the opposite - lower levels of protection. There is a general belief that the TRIPS agreement of the WTO does not adequately cater for this fundamental difference in position. Indeed, there are very limited concessions or special treatment afforded to the developing countries in the TRIPS. This has fuelled much of the debate.